Guide to Property Finance

What is a complex buy-to-let mortgage?

These are specialist mortgages aimed at people in unique circumstances when a basic first charge mortgage or standard Buy-to-Let Mortgage isn’t suitable.

Not every person or business is the same and when applying for a mortgage any unique circumstances can make it harder to be accepted.

Like Buy-to-Let Mortgages, your application can be judged on how strong your business case is, or whether your rental income can cover the mortgage payments.

Most suppliers of Complex Buy-to-Let Mortgages ask for a 125% rental coverage – e.g. if your monthly mortgage payments are £1,000, you would need rent of £1,250 to be accepted.

The complex part of a Complex Buy-to-Let Mortgage comes from: same

• Problems with property. Anything that makes it hard to judge the validity of the rental income quoted by the applicant or whether the property can be consistently rented out in the long term. This often applies to commercial or part-commercial properties
• Issues with the borrower. Borrowers could have credit or experience challenges, making it harder for lenders to have confidence in their business model. Other issues include when the borrower is a group of individuals or a Special Purpose Vehicle Company
• Unusual mortgage terms. These include terms up to 30 years, short-term interest-only mortgages and second charge buy-to-lets
• Banks’ exposure limits. These are ways that high street lenders manage their risk by limiting how much lending they do to a particular geographical area, individual landlord or even a single property, mean they can be less likely to lend

When would you use it?

Complex Buy-to-Let Mortgages can be used for residential and commercial properties – or a mixture of the two.

They are good for mixed properties such as flats over shops, flats with shops, flats over or near restaurants or late night stores (due to noise levels), or buildings with leisure uses such as pubs, where a tenant would live in the property.

They are also useful for divided properties like Houses of Multiple Occupancy, where there are different tenants in the same house, such as student houses, or where multiple separate properties have been created on the same property title, e.g. when one house has been converted into several flats. This is due to the complexity of managing multiple tenants, whilst keeping occupancy levels high.

Foreign business people and expats, offshore companies, and self-employed or retired people can have problems getting Basic Buy-to-Let Mortgages so often use Complex Buy-to-Let Mortgages.

Usually provided through approved distributors, not through intermediaries. For many of the situations in which a Complex Buy-to-Let Mortgage is needed, experience as a landlord is vital

• Reduced landlord exposure limits
• Up to 85% residential LTV
• Up to 75% commercial LTV

Benefits for small businesses and semi-professionals

• Designed with business people in mind
• Better deals for experienced business people
• Great for people with unique circumstances
• Good for buying multiple properties in same building